Home Mortgage Refinancing Guide

As home values skyrocket, many first time home buyers are opting for interest only mortgage loans. Others are purchasing homes with zero cash down so they can afford a home. While these homebuyers have paid very little toward principal on their loans, they are building equity simply by owning their homes. The home price index released by the government shows little evidence that home value appreciation is reaching its peak. However, the rapid appreciation of home values, more than 20 percent per year in some areas, cannot be sustained, according to the government report. This could be a problem for many homebuyers with heavy mortgage debt, counting on value appreciation to turn a profit when they sell the home.

Timing the housing market is next to impossible. Homes have been appreciating by more than 13 percent this year; home value appreciation will vary depending on the part of the country the home is in as well as the quality of the neighborhood. If you have little or no assets, you won?t have anything to fall back on if home prices fall. Should those values fall flat, you still have to pay fees to sell your home. While interest rates have not gone up much from their historic lows, there are plenty of reasons for rates to go higher. If you are considering an adjustable rate mortgage (ARM), which means you will have lowers payments in the beginning, it is very likely your payments will go up eventually. With all the risks associated with purchasing a home, what is a first time buyer to do? Make sure you do you homework before taking out a mortgage. Use a mortgage calculator to determine how much mortgage you can afford. Even if you mortgage conservatively with a 30 year fixed interest rate loan, in many cases your income many not be high enough to qualify for a medium-priced home.

Something to consider: do you really want or need a home. There is nothing wrong with jumping into the housing market now. However, if you just buy a home because everybody else is, that may not be the best reason. Consider how much you can afford and how difficult it would be to keep your mortgage payments going if you have a problem selling it. Your ability to refinance a mortgage in the future is not a guarantee. There is no way to be sure the conditions that you received a mortgage today will exist in the future. As a first time home buyer take advantage of programs geared towards first time buyers. Many state, county, and federal housing agencies offer down payment assistance for first time home buyers. Many of these programs are restricted to mid or low income individuals; however, in some areas where prices have skyrocketed, it is easier to qualify for these programs.

With many programs today the loan is interest free and your payments do not begin for five years. There is a catch however; you will owe your city a percentage of your profit when you sell the home. This is much less risky than skimping to make adjustable rate mortgage payments.

Weigh the risks associated with an adjustable rate mortgage against the lower initial payments and you may save yourself a lot of heartache down the line.

To learn more about chosing the right mortgage for today and tomorrow, sign up for our free guide to mortgaging on our home page.

For the first time in the history of the housing market in the US, the government is asking banks to return the most recent mortgage payments from people displaced by Hurricane Katrina. Freddie Mac, the government’s housing agency, has asked mortgage lenders to return September mortgage payments made by anyone in the affected areas. Mortgage industry experts say this is unprecedented. It is one more option for those displaced by the Hurricane with fewer and fewer options.

Mortgage interest rates stayed at their low levels as the depressed outlook after Hurricane Katrina brought on a slowdown to the economy. The current interest rate for a 30 year fixed rate home mortgage remained unchanged for a second week at 5.71 percent according to a survey of national lenders. Long term mortgage interest rates are at the lowest levels since mid-July when the interest rates topped 5.66 percent.

Last summer, the 30 year fixed interest rate mortgage loan was 5.83 percent. The 15 year mortgage interest rate is currently 5.30 percent, down from 5.32 percent last week. This time last summer the 15 year rate averaged 5.22 percent.

Five year adjustable rate mortgages (ARMs) are currently 5.24 percent, down from 5.30 percent. One year adjustable rate mortgages dropped to 4.45 percent; last week the one year ARM was 4.48 percent. This time last summer the one year ARM averaged 4 percent.

Refinance a Mortgage - Five Things You Need to Know

Last week we reported applications for home mortgage loans were on the decline from the week before. Applications for home mortgage loans rebounded this week as homeowners took advantage of the drop in mortgage interest rates; interest rates are currently at a two month low. A survey of mortgage lenders this week stated the index of mortgage applications, an indicator that measures the volume of mortgage applications, was up 6.8 percent to 771.6 last week. This index dropped 4.5 percent in the week before; the home purchase index was up 6.1 percent to 499.1. The survey’s mortgage refinancing index rose 7.7 percent to 2,357.1, after a decline of 5.4 percent the week before. Fixed 30 year mortgage interest rates dropped 9 points, or .09 of a percentage, to 5.64 percent, down from 5.73 percent the week before. This is the lowest mortgage interest rate since early in July when it was 5.62 percent. The fixed 30 year mortgage interest rate is lower than the high 6.08 percent reached in earlier this year, it is still above the June low of 5.47 percent; this mortgage interest rate is still lower than it was this time last summer.

Mortgage Refinancing - How to Refinance a Mortgage and Save Thousands

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The housing market may at last be reaching its peak. This means that the appreciation of home values will slow and could mean hot water for homeowners that purchased more home than they could afford. That’s the assessment of many, stating that the the drop in housing has been a long time coming. Sales have been shooting through the roof this summer, establishing new records for the purchase of new and existing homes. With home prices so high, many new buyers are seeking more “non-traditional” forms of financing to qualify for the purchase.

Some potential buyers have held off on their purchases for fear they would buy the top of the market; after purchasing their home they would see values drop. It is very difficult to time the housing market; if you are buying because of relocation and you will not be moving again, then you are better off to buy now. Chances are that even if the home value goes down, prices will resume rising and you’ll come out ahead when you’re ready to sell. Homeowners that have adjustable rate mortgages (ARM), should now refinance to a fixed rate mortgage loan. Interest rates are at the lowest levels in more than forty years. The recent shock to the economy from natural disasters should keep mortgage rates declining for some time. However, the long term forecast is that mortgage interest rates will start going up again and could peak above 7 percent. Homeowners who have been “playing the market” so to speak, buying homes and then “flipping” them for a profit, should reconsider their investment approach. This could be dangerous if home values stop rising. Retirement age homeowners who are in need of cash, might consider what’s called a “reverse mortgage;” this allows a them to borrow against the equity in their home. These types of mortgages forego payments as long as the homeowner lives in the house.

Trying to sell your home? Take heed; homes are staying on the market much longer before selling. A recent survey of mortgage lenders shows demand for home mortgages loans is down 11 percent this summer. How much of a slowdown there is and whether home values will drop depends on interest rates in over the next few months. The Hurricane might actually help the industry, due to declining mortgage interest rates. Analysts are forecasting that home sales will drop from their record levels by the end of the year. This declining pace should end the over-valued price gains in the housing industry.

Refinance a Mortgage - What You Need to Know

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